Upload
tabbforum
View
114
Download
3
Embed Size (px)
DESCRIPTION
On Thursday, April 21, 2016, more than 80 investment professionals and emerging growth company executives participated on SJA/Sharevault’s webinar, “New FinTech Funding Alternatives for Life Science Companies.” Topics of discussion included how to leverage FinTech (Financial Technology) and the JOBS Act to raise capital and/or achieve “exits,” including via the public markets (Reg A+, Tier II ~ELIO Motors).
Citation preview
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
Our Presenter: Scott Jordan,
CEO, S. Jordan Associates
Thursday, April 21, 2016
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
2Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Agenda• Introduction – Stephen Joseph
VP of Business Development, ShareVault
• Presentation – Scott Jordan CEO, S. Jordan Associates
• Questions & Answers
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
3Copyright © 2016, ShareVault Inc. and S. Jordan Associates
• The webinar will last 60 minutes (until 12pm PDT / 3pm EDT / 7pm GMT).
• Your audio is muted.
• Contribute questions via the Q&A GoToWebinar interface, and we will address them at the end.
• The webinar is being recorded, and we will contact you when it becomes available.
• We welcome your feedback on this webinar as well as topic requests, so that we can provide others of interest to you in the future.
Logistics
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
4Copyright © 2016, ShareVault Inc. and S. Jordan Associates
This Webinar Is Hosted by ShareVault
ShareVault is a full-featured, state-of-the-art virtual data room that allows customers to
simply and securely share sensitive documents in the cloud.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
5Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Sample Transactions Using ShareVault
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
6Copyright © 2016, ShareVault Inc. and S. Jordan Associates
About Our Presenter, Scott Jordan
Emerging
Growth
Companies,
“Sell Side”
Large BioPharma, MedTECH,Medical Devices,“Sell Side”
• CEO of (SJA), a management consulting and investment banking firm dedicated to:
• Assisting early-stage/growth companies accelerate therapeutic, medical device, and medtech development programs via: • Business development (licensing)• Private placements and• “Exits” (M&A)
• Empowering search and evaluation teams source premium deal flow globally utilizing Financial Technology (FinTECH)
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
7Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Scott Jordan’s Background• Over 25+ years of experience:
• Negotiating strategic corporate alliances• Securing international licensing agreements• Building national sales teams• Contributing to successful product development,
approval, and launch
• Cross-functional experience with former leadership roles in: • Sales & marketing• Licensing• Finance• Business Development
• Level II Candidate in the Chartered Financial Analyst (CFA) Program and holds Series 7, 66, 63 & 31 Certifications
• Adviser to the world’s leading online investment platform sponsored by a stock exchange (Singapore, SGX), and venture capital firm (Clearbridge Accelerator): CapBridge
• Founder of Healthios’ investment marketplace, HealthiosXchange, http://www.healthiosxchange.com/ ; raised over $150 million for private emerging growth healthcare companies from 2013-2015
• Has helped numerous companies raise capital, secure licensing agreements and find acquirers, including Calibra Medical, Nippon Kayaku, NeoPharm, and more.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
8Copyright © 2016, ShareVault Inc. and S. Jordan Associates
FinTECH (Financial Technology)
• >3,300 members – Accredited Investors, Early- Stage/Growth Company Executives, Investment Professionals, Strategic Buyers
• 1,500 healthcare companies in 46 Market Sectors Seeking Licensing Partners, Financings, and/or “Exits”
• Sponsors – S. Jordan Associates and Healthios, Chicago-Based Healthcare Investment Bank
• The World’s Premier “Direct Investing” Platform
• Sponsored by:• The Singapore Stock Exchange (SGX)• Venture Capital Firm, Clearbridge Accelerator• HealthiosXchange
• SGX - Raise, Capital for Small-Medium Size Enterprises (SME), Fund Allocation, Shares depository (“IPO On Ramp”)
Launching May 26
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
9Copyright © 2016, ShareVault Inc. and S. Jordan Associates
HealthiosXchange Membership Geographic Distribution
48
809 148
229 29
39 2
62
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
10Copyright © 2016, ShareVault Inc. and S. Jordan Associates
What SJA Can Do for YouPartner with SJA - Execute Licensing
Agreements with Large
BioPharma, Medical Devices, HIT Companies
Collaborate with SJA and Healthios
Sourcing Capital From Institutional and
“Alternative” Investors
Hire SJA as Your “Internal”
Investment Banking Team
Acquiring Products/ Companies
Business Development
Private Placements
Strategic Advisory
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
11Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS Act (Jumpstart Our Business Startups)• Intended to Encourage Funding of United States Small Businesses
by Easing Securities Regulations
• Passed with Bipartisan Support and was Signed Into Law by President Barack Obama on April 5, 2012
• The JOBS Act Substantially Changed a Number of Laws and Regulations Making it Easier for Companies to Both Go Public and to Raise Capital Privately and Stay Private Longer
• Major Provisions:
• Relieve Emerging Growth Companies from Certain Regulatory and Disclosure Requirements in Registration Statement When “Going Public”
• Lift the Ban on General Solicitation and Advertising in Specific Kinds of Private Placement of Securities
• Increase the Number of Shareholders Before a Company Has to Register with SEC and Become a Publicly Reporting Company from 500 to 2,000 Total Shareholders
• Allow Equity Crowdfunding (Non-Accredited Investors)
• Raise the Limit for Securities Offerings Exempted under Regulation A from $5 to $50M (Tier II)
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
12Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Titles of the JOBS Act• Title I Reopening American Capital Markets To
Emerging Growth Companies
• Title II Access To Capital For Job Creators
• Title III Crowdfunding
• Title IV Small Company Capital Formation
• Title V Private Company Flexibility And Growth
• Title VI Captal Expansion
• Title VII Outreach On Changes To The Law Or Commission
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
13Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS Act Title I
JOBS Act Title II
JOBS Act Title III
Approval Date 09/2013 09/2013 10/2015 (Effective 05/2016)
Description Making IPO’s Easier Reg D 506 (c) - Private Placements
Crowdfunding
Value Propositions “Testing the Waters”Confidential Registration Statement
Lifted Ban on General Solicitation Marketing:
Social Media Online Due Diligence /
Investment
Raise up to $1M in 12-Month Period Reviewed Financials: Capital Raise
$100K><$500KGeneral Solicitation - w/Limitations
Impact Doubled Biotech IPOs from 2013-14
>$1 Billion Raised TBD
Security Public Equity Private Equity Private Equity
Investor Type Non/Accredited Accredited Non-Accredited
Investor $ Limits None None Invest Greater of $2,000 or 5% of the Lesser of Annual Income or Net Worth
Invest Lesser of $100,000 or 10% of the Lesser of Annual Income or Net Worth
Summary 1 of Titles I, II and III
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
14Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS Act Title IV, Tier 1
JOBS Act Title IV, Tier 2
Approval Date 03/2015 (Effective 06/2015) 03/2015 (Effective 06/2015)
Description Reg A+ Reg A+
Value Propositions Raise up to $20M in 12 Months Reviewed Financials General Solicitation
Raise up to $50M in 12 Months State Pre-Emption
General Solicitation
Impact ~Community Banks Selling Stock Intrastate
(Aperion Biologics, BeautyKind)Underwriter — WR Hambrecht
83 Reg A+ Offerings Filed
Security Private/Public Equity Private/Public Equity
Investor Type Non/Accredited Non/Accredited
Investor $ Limits None Non-Accredited: Greater of up to 10% of
Annual Income or Net Worth
Summary 1 of Title IV, Tiers 1 and 2
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
15Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS Act Title I
“Making IPO’s Easier”
JOBS Act Title II
Reg D 506 (c) - General Solicitation
JOBS Act Title III
Crowdfunding
Projected $ Raise Unlimited $1-2M <$500K
Cost ~$3.0M (Nasdaq)~$1.5M (SGX)
Accounting/Legal: $10,000+
Accounting/Legal: $10,000+
Company Stage Late Stage Early - Late Stage Early Stage
Exchange/ FinTECH
Platforms
Catalist/Singapore Stock Exchange (SGX)
OTC, NasdaqNYSE
AngelList, AngelMD,
Crowdfunder, Healthfundr,
HealthiosXchange
Crowdfunder, Onevest,
RocketHub
SJA Services “Go Public” on SGX Company Listing / Offering on Capbridge
TBD
Summary 2 of Titles I, II and III
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
16Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS Act Title IV, Tier 1
Reg A+, Mini-IPO
JOBS Act Title IV, Tier 2
Reg A+, Mini-IPO
Projected $ Raise <=$20M <=$50M
Cost ~$500K ~$1M
Company Stage Mid - Late Stage Mid - Late Stage
FinTECH Platform StartEngine, Banq StartEngine, Banq
Investor $ Limits None None
Summary 2 of Titles IV, Tiers 1 and 2
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
17Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“With only ~100 new biotech startups being formed each year, and only a few dozen firms actively doing it, there’s a tiny universe of players responsible for creating the next wave of biotech's likely to mature in the second half of this decade.”
“... the difference between then (1998-2002) and now (2009-2013): in 2000, the number of early-stage investors spiked 75% as the IPO window for biotech began to open up, and stayed high through the collapse of the bubble in 2012.
By contrast, the last few years — even with one of the biggest/longest IPO windows in biotech history — have been defined by restraint and constraint in terms of early-stage biotech venture and startup formation.”
0
50
100
150
200
250
Numb
er of
Inve
stors
1998 / 2009 1999 / 2010 2000 / 2011 2001 / 2012 2002 / 2013
1998-20022009-2013
Then Vs. Now: First/Seed Round BioPharma Investors
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: Dow Jones Venture Source, Franklin Park Associates, NVCA
Is the JOBS Act Important for the Life Sciences Sector?Early Life Science Investors
Early Life Science
Investors
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
18Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“Active life science investor numbers (including BioPharma and MedTech) dropped by 25% since 2007, and haven’t rebounded...FLAG Capital Management did a further refinement of “active” investors filtering for only investors that had made at least four new investments with at least $4M in aggregate during 2013, they identified only ~25 active healthcare venture capital investors, and only a subset of those VC’s actually help start or back drug discovery and research stage biotech’s – probably only a dozen firms regularly start or fund more than 4-6 new biotech companies a year.”
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: Dow Jones Venture Source, Franklin Park Associates, NVCA Yearbook 2014, Figure 1.05
0
50
100
150
200
250
300
350
400
Numb
er of
Inve
stors
2007 2008 2009 2010 2011 2012 2013
LS InvestorsNon-LS Investors
Number of “Active” Investors Investing >$50M per Year
Is the JOBS Act Important for the Life Sciences Sector?Active Life Science Investors
Active Life Science
Investors
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
19Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“Investors participating in BioPharma venture deals declined by ~40%, and never recovered those numbers. This represents a major culling of the herd.”
BioPharmaIT
Tota
l Num
ber o
f Inve
stors
0
200
400
600
800
1,000
1,200
2007 2008 2009 2010 2011 2012 2013
Total Venture Round Investors
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013
Total First/Seed Round Investors
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: Dow Jones Venture Source, Franklin Park Associates, NVCA
Is the JOBS Act Important for the Life Sciences Sector?Life Science Investors Life Science
Investors
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
20Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“The take home message from these data is clear: there’s a huge influx of capital into venture, mostly into technology, and there remains a limited pool of capital flowing into life science venture, and even smaller into early-stage funds – despite the IPO and M&A markets.”
Life ScienceNon-LS Venture (Tech)
$, Bil
lions
0.0
5.0
10.0
15.0
20.0
25.0
30.0
20072005 20082006 2009 2010 2011 2012 2013 2014
Venture Capital Fundraising
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: Dow Jones Venture Source, Franklin Park Associates, NVCA
Is the JOBS Act Important for the Life Sciences Sector?Venture Capital Venture
Capital
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
21Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“In the past two years, we have seen the emergence of non-VC investors, particularly hedge funds, providing “top-up” financing to IPO-ready companies prior to entering the market.” — Jonathan Norris, Kristina Peralta, “Trends in Healthcare Investments and Exits 2015,” Silicon Valley Bank (SVB)
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: “Data Snapshot: Venture-Backed Biotech Financing Riding High,” Forbes, 4/21/15
*Later Rounds of Financing defined as any financing that are not “First Financings.”
0
20
40
60
80
100
120
140
2Q05
2Q08 2Q11
2Q06
2Q09
2Q12
2Q07
2Q10
2Q13
2Q14
4Q05
4Q08 4Q11
4Q06
4Q09
4Q12
4Q07
4Q10
4Q13
4Q14
Number of Later Rounds
Later Rounds* of Financing in VC-Backed BiotechQuarterly Datapoints and 3Q Rolling Average
$0.00$0.20$0.40$0.60$0.80$1.00
$1.60
$1.20
$1.80
$1.40
$2.00
2Q05
2Q08 2Q11
2Q06
2Q09
2Q12
2Q07
2Q10
2Q13
2Q14
4Q05
4Q08 4Q11
4Q06
4Q09
4Q12
4Q07
4Q10
4Q13
4Q14
Later Rounds of Funding ($B)
“The later-stage financings that have been driving up the aggregate numbers are almost without exception driven by crossover investors (like hedge funds and mutual funds who typically invest in public companies) or non-traditional partners like financial institutions. For example, The Alaska Permanent Fund put nearly $300M into Juno Therapeutics during their private round.”
Is the JOBS Act Important for the Life Sciences Sector?Crossover Investors (1)
Crossover Investors
1
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
22Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Bruce Booth “Early Stage Biotech Venture Scarcity: Fitness, Fear, and Greed,” Forbes, 9/22/14 Data: “Data Snapshot: Venture-Backed Biotech Financing Riding High,” Forbes, 4/21/15
*Later Rounds of Financing defined as any financing that are not “First Financings.”
020406080
100
140120
180160
2Q05
2Q08 2Q11
2Q06
2Q09
2Q12
2Q07
2Q10
2Q13
2Q14
4Q05
4Q08 4Q11
4Q06
4Q09
4Q12
4Q07
4Q10
4Q13
4Q14
Number of Financings
VC-Backed Biotech Funding - 10 Year ViewQuarterly Datapoints and 3Q Rolling Average
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
2Q05
2Q08 2Q11
2Q06
2Q09
2Q12
2Q07
2Q10
2Q13
2Q14
4Q05
4Q08 4Q11
4Q06
4Q09
4Q12
4Q07
4Q10
4Q13
4Q14
Funding ($B)“My estimate, based on discussions with a few bankers who track crossover activity, and an appreciation of Corporate Venture Capital (CVC) contributions, is that only around 50% of the $6B invested in private biotech’s came from “conventional” venture investors (meaning independent venture firms backed by groups of LPs).”
Is the JOBS Act Important for the Life Sciences Sector?Crossover Investors (2)
Crossover Investors
2
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
23Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Is the JOBS Act Important for the Life Sciences Sector?Crossover Investors (3)
Crossover Investors
3
Companies with Cross-Over Led Pre-IPO Financing Rounds Have:
• Significantly higher pre-money valuations at IPO (128% higher valuation - $290M vs. 127M)
• Cross-over support IPOs at bigger step-ups in price at IPO (multiple over the last private round valuation is 34% higher)
• Post-IPO stock appreciation vastly outperforms for companies with cross-overs in their pre-IPO round (83% stock appreciation, at the median, versus trading down by 10% without cross-overs)
0 0 -60%With
Crossover Investors
With Crossover Investors
With Crossover Investors
Without Crossover Investors
Without Crossover Investors
Without Crossover Investors
500.4x -20%0.2x -40%
1000.6x 0%1500.8x 20%2001.0x 40%
250 1.2x 60%
400 1.8x 120%
300 1.4x 80%
450 2.0x 140%
350 1.6x 100%
Pre-Money IPO Valuation ($, Millions)
Step-Up Multiple from Last Round Into the
IPO Valuation
Post-IPO Stock Performance (% Change)
Bruce Booth, “The Biotech Cross-Over Phenom: Biomarker of Quality?” Forbes, 11/7/14
Data: Jonathan Norris, Kristina Peralta, “Trends in Healthcare Investment and Exits 2015,” Silicon Valley Bank (SVB)
Ranges represent 25th and 75th percentiles areound the median value (50th percentile) N=24 companies with cross-over investor led pre-IPO financings, and 70 companies without Data as of October 20, 2014.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
24Copyright © 2016, ShareVault Inc. and S. Jordan Associates
“Everyone in venture-backed emerging companies acknowledges that going into the public markets with a solid list of blue chip cross-over investors in the capital structure is a good idea conceptually. It makes sense to line up big future owners of the stock early to help support the book-building process in the offering.”
# of
Deals
0
2
4
6
8
10
12
Ra Cap
ital
Deerfie
ldRoc
k Spri
ngs
Adage
Capita
l Mgm
tRed
mile Gro
upWelli
ngton
Mgmt
Percep
tive Ad
visors
Health
care R
oyalty
Sabby
Capita
lTop
Spin P
artner
sBro
okside
Capit
al
Jennis
on Ass
ociate
s
Satter
Invest
ment Mgm
t
Sector
al Asse
t Mgm
t
Exhibit 13” Most Active* New Non-VC Investors (2013-2014)
Biopharma Device Dx/Tools
Jonathan Norris, Kristina Peralta, “Trends in Healthcare Investment and Exits 2015,” Silicon Valley Bank (SVB)
Is the JOBS Act Important for the Life Sciences Sector?Crossover Investors (4)
Crossover Investors
4
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
25Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Can the JOBS Act Increase Access to Capital Including Alternative Investors (~Accredited, Family Office, Cross-Over
Investors, LP’s on a Direct Basis)?
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
26Copyright © 2016, ShareVault Inc. and S. Jordan Associates
JOBS ActEquity Crowdfunding: $1.08BLN in 2015
Market Volume in Americas by Alternative Finance Model 2013-2015 ($USD)
Proportion of Total Funding by Institutional Investors Real Estate Dominates Online Equity
Average Fundraising Size
Equity-Based Crowdfunding: 168% Growth Rate (2013-2015)
2015: $598.05M2014: $271.95M 2013: $86.29M
4.68%
$963K
Real Estate: 231% Growth Rate (2013-2015)
2015: $483.77M2014: $138.15M 2013: $44.30M
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
27Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title II - Reg D 506 (c)General Solicitation
Advertising ~Social MediaReach Alternative Investors
• Reg D Market = $1.2 Trillion• Only 6% of 8.7 Million Accredited Investors Have Made a Private Equity
Investment in U.S.
• Of These 500,000 Investors, Only 10% Participate Online (~Portals)• Of the 50,000 Participating Online, Only 10% Made an Investment or• 5,000 Investors
• Bruce Booth - Atlas Ventures (Forbes)• 120M Households in the U.S.• Top 1% (~1M Households) Have a Mean Household Net Worth Near $15M• Invested Just 0.01% of Their Net Worth Each Year – or $15K – Into Crowdfunded
Life Science Companies, Would Create $15B of Fund Flows Into Biotech• This is 3x More Than the Total Biotech Venture Capital Market (2013)
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
28Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title II - Reg D 506 (c)The Investment Process
Market to Prospective Investors via General Solicitation
(email, Social Media, Online Ads)
Prospects Review Offering on Funding Portal and Perform Due
Diligence
Indications of Interest, Investment Confirmations
Received
Portal Performs AML, KYC, and Verifies Accredited Status of
Investors
Investment Capital Transferred into Escrow
Escrow is “Broken” and Proceeds Sent to Company Minus Fees to
Portal (Success/Listing Fees)
Alternative
Investors –
AccreditedCrossoverInvestors
Portal Market Sector
# of Investors
FundersClub Technology 16,000
FundRise Real Estate 80,000
Healthios-Xchange
Healthcare 3,500
SeedInvest Technology 6,500
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
29Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title II - Reg D 506 (c)Online Portals - Track Record
Portal Market Sector $’s Raised on Portal (Since Inception)
Investors Backing Portal
AngelList Technology $163M (2015) Google Ventures
Capbridge All Sectors Launching, Summer 2016 SGX, Clearbridge Accelerator
CircleUp Consumer Goods $193M Union Square Ventures, Canaan
FundersClub Technology $55M Andreesen Horowitz, DFJ
HealthiosXchange* Healthcare $150M None
RealtyMogul Real Estate $200M Canaan
*Includes syndication and co-investing from institutional investors
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
30Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title III - CrowdfundingOpportunities & Constraints
Opportunities Constraints
Investment Limits • Parallel Offerings Allowed Including 506, Reg A+, S-1
• Issuer May Raise Only $1M During Any Rolling 12-Month Period (Applies to Affiliates as Well)
Limits on Investors • Annual Income <$100k: > of $2,000 or 5% of Lesser (Annual Income, Net Worth)
• Annual Income <$100k: < of $100,000 or 10% of Lesser (Annual Income, Net Worth)
Limits on Issuer • Issuer Must be Organized in U.S.• Issuer May Not be a Public Reporting or
Investment Company
Limits on Advertising • Intermediary Can Advertise Itself and Present Issuer Offerings
• Issuer May Not (Except at Portal) Advertise the Details of Offering
Qualified Portal “Intermediary”
• Issuer Seeking to Raise Capital Must List on Qualified Portal
• Offering Must be Conducted Only On “One” Portal
Offering Disclosure Requirements
• SEC Approval not Required • Form C: Issuer Required to Make Extensive Disclosures
Financial Information • Raising <$100K: Financial Statements “Certified by Issuer”; $100k><$500: “Reviewed”
• Raising >$500K: Audited Financials
Shareholder Limits • Investors Don’t Count Toward 2,000 Total or 500 Non-Accredited
Shares Restricted • Yes, 1 Year
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
31Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title III - CrowdfundingSample Portals
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
32Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title III - CrowdfundingReasons to Use/Not Use
Why Use Title III? Why Not Use Title III?
• Raise Capital from Non-Accredited Investors
• Only Need Capital and Nothing Else, Easier Time Raising Capital from Accredited Investors Using Title II (Reg D)• Less Disclosure Requirements• More Flexibility – General Solicitation
• Attract “Affinity” Investors • Company Needs $350k for Patents on a
New Heart Valve• Via a Social Media Campaign, Company
Might Identify Thousands of Potential Investors from Those Affected by Heart Disease
• If Company Requires Larger Amounts of Capital from Non-Accredited Investors, Use Title IV
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
33Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+Comparison to Title ITitle I - Initial Public Offerings (IPO’s) Title IV - Reg A+ (Mini “IPO”)
• Emerging Growth Company, <$1BLN in Sales
• Tier 2
• 5-Year Grace Period – Reporting Under Federal Law
• Reduced Financial Disclosures: Only 2 years of Audited Financial Statements
• Reduced “Management’s Discussion and Analysis of Financial Condition”
• Not required to comply with Section 404 of Sarbanes-Oxley Act
• “Testing the Waters” Allowed Before Registration as Long as No Funds Accepted
• Allow “Testing the Waters” to Determine Investor Appetite• Enables Use of Public Channels (Email, Social Media) to Market under General
Solicitation• Raise Up to $50M in a Calendar Year• Only 2 Years of Audited Statements• State Pre-Emption (Avoid Blue Sky Laws)• Access to Non-Accredited Investors
• Lower Filing and Underwriting Costs than Under Traditional IPO • Only Prepare a Six-Month Interim Report vs. Quarterly Reports for Registered Issuers
• Smaller Amounts Can Be Taken From a Larger Number of Investors Without Triggering 34 Act Reporting
• No requirements to Involve FINRA- Approved Underwriter or BD’s (~ELIO Motors)
• Securities Tradable Immediately (“Unrestricted”) Providing Liquidity to Investors and Owners
Tier 1 Fueled Biotech IPO Activity
Biotech IPOs < JOBS Act (Previous 2 Years, 2011 - 2012): 32
Biotech IPOs > JOBS Act (Following 2 Years, 2013 – 2015): 80
Reg A+ Filings to Date
83 Reg A+ Filings >50% (Tier II): Size of Offerings
($50M) and State Preemption
JOBS Act legislation makes it easier for small, innovative
companies to “Go Public” at lower costs by widening the investor base to include non-
accredited investors and the ability to
reach investors via general solicitation.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
34Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+Opens Paths to Financing for US/Canadian Companies
Benefits Those Companies That:• Are Too Large for Angel/VC Funding• Are Too Small for Traditional IPOs • Wish to Avoid Negative Connotations of
Reverse Mergers• Desire to Get Used to Reporting Before
Uplifting to a National Exchange and Becoming a Fully Reporting Company
• Desire to File Confidentially, Providing SEC an Opportunity to Review Offering Statement w/o General Public Knowing
Allows Issuers to:• Raise Money From Non/Accredited Investors • Raise Capital Faster and less Expensively than
Traditional Methods• Allows test the Waters Period to Determine
Investor Appetite• Create Immediate Liquidity, Non-Restrictive
Shares for Shareholders and New Investors• Reduce Filing and Compliance Requirements• Exempt from SEC Registration Requirements
– 12 (g)• Public Float < $75M, Annual Revenues < $50M
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
35Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+Comparison to Traditional Way of “Going Public”
Traditional IPO Has High Upfront and Maintenance Costs:
Upfront Costs:• Accounting Fees, Legal Fees, Professional
Advisor Fees, Filing Fees, Financing or Placement Fees, Exchange Fees, Management Meetings, Conference Calls, Roadshows, Marketing Expenses
Maintenance Costs:• Director and Officer Insurance, Accounting,
Legal, Board Compensation, SEC Filing Costs (10-Ks, 10-Qs), Financial Marketing Costs (Analysts, Market Makers, PR), Corporate Governance Setup and Maintenance Costs
Traditional IPO Has Restrictive Listing Standards and Requirements:
#1: Earnings#2: Capitalization w/Cash Flow#3: Capitalization w/ Revenue#4: Assets w/Equity #5: Liquidity: # of Shareholders
Traditionally “Going Pubic” was
very expensive and geared
towards later-stage companies
given high upfront/maintenance costs
and restrictive listing requirement.
Average Cost
to Go Public:
~$3M
Listing: $125K Entry + $25K Application Fee
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
36Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+Costs and Listing Requirements
Lower Filing Costs and Ongoing Reporting Requirements:
Tier 1: <$500K, Tier 2: <$1.0M
SEC Filing Process File 1-A, Offering Circular, Subscription Agreements
Offering Process Transfer Agent, Blue Sky Filings, Escrow
Pre-Deal/Marketing Auditing, “Testing the Waters,” Deal Marketing, Solicitation of Interest
Post-Offering Shareholder/Trading
Shareholder Records, Electronic Trading, Brokerage Accounts
Exchange FINRA 15c2-11, Listing Fee OTCQX OTC Quotation
Less Restrictive Listing Requirements:
Go Public Earlier
Raise Smaller IPO <$50M From Alternative Investors
Accredited Investors, Family Offices, LP’s
Reg A+ Eligible via Professional Third-Party Advisor Sponsorship
Designated Advisor for Disclosure (DAD)
Liquidity for Shareholders (Trade Shares post-IPO), FINRA Rule 5110
Acquire Issuer Securities During 180-day Review Period w/o Securities Deemed Underwriting Compensation
Post-Offering Shareholder/Trading
Shareholder Records, Electronic Trading, Brokerage Accounts
Via Reg A+ smaller companies can “Go
Public” without an underwriter
(lower costs), more easily meet listing requirements, and
simultaneously raise capital and list on a public
exchange - OTCQX (highest ranking
OTC level)
“Small Cap IPOs”
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
37Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingTier 2 Advantages
Advantages for Investors Advantages for Companies
Access to Pre-IPO Companies Assess Demand via “Testing the Waters” and Confidentially File w/SEC
Emotional Quotient, Customers Eager to Support Companies They Believe In
Sell Equity to Customers Passionate About Company
Existing Shareholders Sell up to $15M in the Offering (No More than 30% of Aggregate Offering Price)
Non-Accredited Investment Minimums Higher than Crowdfunding; > of 10% of Income or Net Worth
No Holding Period for Existing Shareholders (Unrestricted)
Raise Capital and Simultaneously List on Stock Exchange: OTCQX, NASDAQ
Lower Costs vs. Traditional IPOs and Less Punitive than PIPES (Warrant Coverage)
Reg A+ Crowdfunding
enables smaller/innovative
companies to “Go Public” by “Testing the Waters” with
customers who are passionate about investing (ELIO –
Electric Cars).
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
38Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingFirst Crowd-Funded IPO
Benefits
Fun-to-Drive
Super-economical: 84mpg
Affordable: $6,800
Safe: • 3 airbags• Reinforced roll-cage frame• Anti-lock braking system• 50% larger crush zones
Environmentally friendly
Creates American jobs
ELIO leveraged Reg A+, Tier 2, to raise $17M from customers (pre-
bought electric car)
Elio MotorsPhoenix, AZwww.eliomotors.comUltra-High Mileage, Low-Cost, Three-Wheeled Vehicle
Indications of Interest
50,414 reservations
Customers as Equity Shareholders
Reg A+ Offering — Raise Capital, Simultaneous OTCQX Listing
Completed Offering Using Internet Portal and General Advertising/Video/Social Media as Marketing Vehicles
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
39Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingReward Crowdfunding
Build Customer Base, Pre-Sales50,414 Reservations @$6,800 = $342M Pre-Sold
Sell Equity To Customers under Reg A+, Tier 2
IPO – Awareness Creation Event:• “Tested the Waters” - Confidential Filings• $46M – Indications of Interest from
12,000 Prospective Investors• Stock Offering Conducted over Six Weeks• 6,400 Investors (58% Existing
Customers)• 1.41M Shares Sold @ $12/Share• $17M of Equity Raised • $2,800/Investor
Pre-Reg A+ Filing
Post-Reg A+ Filing
After-Market/ Trading
$240M Market Cap
>$500M Market Cap
Trading Volume: ~8,000 shares/day
$70M of Capital Raised
$17M Raised
Average Transaction Size: 250 Shares
Friend and Family/”Insiders”
Retail Investors
Small Float: 1.41M vs. 26.5 Shares Outstanding
Stock Volatility: $12 $40 ~$20
• Capital Markets Advisor• Designated Advisor for
Disclosure (DAD)• Professional Guidance on
OTCQX, US Security Laws, Corporate Finance Strategy
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
40Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingElio 8-Month Listing Process
Ongoing Reporting
Current Reports, 1-U
Semi-Annual, 1-SA
Annual Reports, 1-K
Up list to NASDAQ?After-Market Support
Low Trading Volume Due to Lack of Institution Capital/Research Coverage
Trading
March 2016
When Shares Listed, Investor Executes Trades in Market
Back Office
Investors Complete Sub Docs, Transfer & KYC, AML Completed
Escrow Agent Releases Funds to Issuer and # of Investors To Transfer Agent
Transfer Agent Creates Certificates, Either Sends to Individual, Book Entry, or Brokerage
Shares Deposited in Brokerage Accounts
Marketing
General Solicitation Allowed w/ Disclosure Document > Qualification
Investors Proceed to Campaign Page to Review Marketing/Offering Materials
Confidential Filings
Filed Offering Statement (Form 1-A), SEC Comments, SEC Amended Filing, Notice of Qualification
Filed 8-A (Exchange Act – Listing on Exchange), and15c2-11 for Exchange Quotation - (OTCQX)
Filed DTC – Enables Electronic Trading/Transfer of Securities to Brokerage Accounts
Filed Manual Listing Exemption – Exempt from Blue Sky if:
“Testing the Waters”
July 2015
Solicitation and Road Shows Allowed < 1-A Filing, Rule 254 (a)
Preliminary Offering Circular Provided to Non/Accredited Investors
Secured $45M
Indications of Interest – Non-Binding
• Shares Purchased on Unsolicited Basis on OTCQX
• No Research Issued
January 2016
$17MRaised
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
41Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingGoing Public Without an Underwriter
Stock Transfer
Transfer Stock into Brokerage Accounts
OTC Markets, ELIO.QX
Stock Exchange
Back Office
Process $’s Into Escrow/Background Checks
Portal — Orders Taken
Generated Interest on Startengine
Marketing Engine
ELIO Paid $200K to CrowdfundX - Marketing
Branding & Advertising
• Crowdfunding Strategy• Crowdfunding Design• Social Media Marketing• Influencer Marketing• Public Relations• Digital Media Buying• Collateral Design• Website Design• Print/Digital Design• Video Production• Photography
Online Portal
• Deal Hosting/ Company Page
• Front-End Offering• Marketing and
Disclosure Displays• Investor Workflows• Transactions
Online Portal
• Escrow and ACH• AML (Anti-Money
Laundering) • Broker Dealer Services • Accredited Investor
Confirmations• Payment Processing• Registered Transfer
Agent• eSign• Investor Management • Print/Digital Design• Video Production• Photography
Facilitate Stock Transfer
• Companies with 500 Non-Accredited Holders or 2,000 Total Record Holders Must Engage Services of Transfer Agent Registered with SEC
• Establish Trading and DTC Eligibility
• Closing the Offering – Issuance of Securities and Delivery to Brokerage Accounts
Stock Exchange (OTCQX)
• Brokers Accepting Shares:
• Wells Fargo• BofA• Schwab• Merrill Lynch• E*Trade
ELIO utilized online platforms (Internet) to raise capital and list on the OTCQX.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
42Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingUplisting from OTC to NASDAQ
OTCQX is a bridge to a national stock
exchange listing (NASDAQ).
OTCQX – Listings
OTCQX
• In 2015, Introduced New OTCQX Rules to Strengthen Financial Standards and Corporate Governance Standards
• 489 Securities (27% Increase YoY)
• $1.4tn Market Cap (Up 4%)• $41.9bn Annual Volume (Up 16%)• Regulation A Reporting Standards
Introduced for OTCQX to Assist Companies “Go Public”
OTCQX Activity Metrics
OTCQX
• 14 Million Visits in 2015 (up 11.5% YoY)• 23k News Releases (up 40%)• 7,100 Financial Reports (up 2.6%)• 580 Videos and Presentations (up 195%)• Companies from 8 Countries Joined
QTCQX
Up list to National Stock Exchange
OTCQX - Global Leader in Exchange Graduates
• Sixty (60) U.S. and Global Companies Graduated from OTC to a National Securities Exchange in 2015
• 47 of Which Came From the QTCQX and QTCQB• Healthcare Companies: Cynapsus Therapeutics
(CYNA), CRH Medical (CRHM), Xtant Medical Holdings (XTNT), Anavex Life Sciences (AVXL)
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
43Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Applicable to Healthcare
Companies w/Existing Customers
(Healthcare Information
Technology, HIT); Biotech?
Web and social media platform for public companies to sell their customer stock ownership plans directly to customers
Received $59M in Commitments From Customers as Part of $427M IPO
Allocated 50% of $1.8 Billion IPO to Dealers and Employees
Title IV - Reg A+, Tier 2 - CrowdfundingCustomer and IPO Allocations
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
44Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingOpportunities for a Public Listing
• Opportunity for Customers, Accredited and Non-Accredited Investors to Participate in Pre/IPO Process
• Public Listing Provides Liquidity to Existing and New Shareholders (Unrestricted Shares)
• Public Listing Broadens Investor Base Including Alternative Capital Sources Seeking Liquidity Option (~Family Offices)
• >$500M Post-Money Valuation Could Attract Micro/Small-Cap Buy-Side Investors
Issues can leverage Reg A+ to expand
investor base.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
45Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingChallenges
• No Placement Agents (Underwriters) and Limited Market Makers (One Required for OTC Listing) Makes Securing Institutional Investors Challenging
• Difficult to Attract Research Coverage for Companies with <$300M in Post-Money Valuation (~Market Cap)
• Low Trading Volumes Associated with Lack of Research, Small IPOs/Public Floats, Results in Lack of Institutional Capital Participation
• Hedge Funds/Crossover Investors Reluctant to Participate Given Post Reg A+ Low Trading Volumes (Difficult to “exit”)
• Small Appetite from VC’s to Participate (Preference for Illiquidity, not SEC 34 Exempt – Can’t Own Public Stocks)
Challenges exist for companies seeking to offer shares via Reg A+ pre/post
transaction.3. Broker Dealer Resistance to Accepting Reg A+
Securities Given:
• Unfamiliar with Reg A+ • More Broker Dealer Liability if Accept
Unregistered Shares/Illegal Distribution (OTC)• Financial Industry Reg Authority – Notice 09-
05 (2009)• Brokerage Firm Obligations in the Resale of
Restricted Securities Include Determining if Securities Eligible for Sale
• Broker Dealers Accepting Shares May Charge Large Deposit Fees up to $1,000
2. Low Trading Volumes — Participation
Challenges of Crowdfunding:
1. Institutional Capital Participation
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
46Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingUnderwriter
Advantages for Alternative Investors
1. Gain Access to Pre-IPO Companies• “First Come, First Served Basis”• Syndicate Groups (Brokers) –
Add Value to Clients• Institutional Investors (LPs)
Participate on Direct Basis – Lower Costs
2. Easier to Sell Shares
• Faster Exit for New Investors - Unrestricted Securities
• Faster Exit for Existing Investors - Higher $ Limits
Sell Shares and Reinvest In Company vs. Raise More $’s
Advantages for Companies
1. “Go Public” at Lower Costs• <$1M Per IPO• Lower Marketing, Legal, Filing Costs
More Capital Available for Development Programs
2. “Test the Waters” via General Solicitation• Assess Investor Interest < Spending Larger Amounts
of Capital
3. Widened Pool of Investors
• Venture Capitalists? VC’s Not Subject to 34 Act (Invest in Public Securities)
• Crossover Investors, Hedge Funds?
Liquidity > IPO
• Selling Groups Show Clients Unique, High Potential New Issues
• (~Broker Dealers)
Aperion Biologics is pursuing a Reg A+ offering utilizing an underwriter (WR Hambrecht) with
established distribution networks (selling groups
like broker dealers) to raise capital from
investors.
Reg A+ enables companies to widen their investor base
(~institutional) including those who seek the flexibility to
sell post-close (Hedge Funds) given stock is
unrestricted.
Venture Preference is for Illiquidity – Obligated to Distribute $’s to LPs Upon Liquidity Event
WR Hambrecht• Advisor • Underwriter
Sign WHR+Co’s Master Selected Dealer Agreement, Support w/ Internet Marketing, Due Diligence
Market Offerings to Retail and Institutional Investors via General Solicitation
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
47Copyright © 2016, ShareVault Inc. and S. Jordan Associates
WR Hambrecht
• Best Efforts to Procure Potential Investors
• Compensation for Advisory Services: $5,000/Month
• Additional Fees: Underwriting Discounts/Commissions (5% of Gross Offering), Warrants (4.5% of Total Shares Outstanding and Priced Equal to 115% of IPO price), Cover Out-of-Pocket (Legal Fees)
JOBS Act
• Defined as Emerging Growth Company• Only Two (2) Years of Audited Financial
Statements• Reduced Disclosure of Executive
Compensation • Exemption from Auditor Attestation
Requirement – Sarbanes-Oxley
IPO
• Selling 3.1M Shares of Common Stock • Closing of Offering, 7.3M Shares of
Common Stock Outstanding • IPO Priced Between $7 - $9/Share• Listing Common Stock on NASDAQ• Sell Lots of 100 or More Shares to a
Minimum of 300 Beneficial Holders
Title IV - Reg A+, Tier 2 - CrowdfundingUnderwriter
WR Hambrecht assisting Aperion with listing on
the NASDAQ via Reg A+.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
48Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+, Tier 2 - CrowdfundingOpportunities & Challenges
Opportunities Challenges
Institutional Capital Sources Pre-IPO Investors, Institutional
• Public Listing Provides Liquidity to Existing and New Shareholders
• Public Listing Broadens Investor Base Including Institutional Capital Participation
• After-Market – Potential for Institutional Investors to Support Trading Volumes
• Research Coverage = “Pay to Play,” Companies/Portals Pay for Coverage (i.e. Moody’s, S&P) Attracting Institutional Investors
• IPOs < $50M too Small for Most Institutional Investors (~Oppenheimer, Raymond James)
• Limited Appetite for VC’s (Unable to Buy Public Stock Under 34 Rule and/or Preference for Illiquidity - Liquidity Event Must Distribute Cash to LP’s vs. Reinvest in Fund) and Other Institutional Investors Given Low Trading Volumes
• Adverse Selection – Companies Utilizing Reg A+ Unable to “Go Public” via Traditional Channels (Quality of Offering, Size of Company, Financial Health); “If Company Could “Go Public” Traditionally, They Would”
Challenges exist for Reg A+ pre/post transaction
including institutional participation.
Reg A+ provides liquidity to existing and new
shareholders.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
49Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Title IV - Reg A+ HybridCombination of Crowdfunding and Institutional Reg A+ Platforms
BANQ and SJA offer Hybrid Reg A+ Models.Partner with SJA, and
BANQ to raise capital via Reg A+.
No Underwriter Underwriter
Reg A+ Crowdfunding Reg A+ Underwriter
• Retail Capital – Customers as Investors • Institutional Capital
Marketing Engine
• Branding and Advertising• Crowdfunding Strategy• Crowdfunding Design• Social Media Marketing• Influencer Marketing• Public Relations• Digital Media Buying• Collateral Design• Website Design• Print/Digital Design• Video Production• Photography
Portal
• Online Portal • Deal Hosting/Company Page• Front-End Offering• Marketing and Disclosure Displays• Investor Workflows• Transactions
Back Office
• Compliance, Regulatory, Back Office• Escrow and ACH• AML (Anti-Money Laundering) • Broker Dealer Services • Accredited Investor Confirmations• Payment Processing• Registered Transfer Agent• eSign• Investor Management • Print/Digital Design• Video Production• Photography
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
50Copyright © 2016, ShareVault Inc. and S. Jordan Associates
BanqFirst Fully Electronic Investment Bank
• Fully Licensed Broker Dealer and SIPC Insured, Enabling Direct Nasdaq Listings if Issuer Qualifies
• Brings Third Parties (i.e. Transfer Agent, Broker, Issuer, Investor) Only Single Platform Facilitating Proper Communication
• Shares Can Trade Immediately on Markets when Quoted
• Shares Can be Transferred to other Broker Dealers (i.e. ACAT)
• Provide Shareholders with all Information From a Single, Easy-to-Use and Intuitive Platform
• Eliminate Physical Certificates, Allowing Electronic Deposit and Sale of Securities
• Hosts Electronic IRA Accounts the can Purchase Reg A+ Offerings
• Utilize Web Technology to Create Attractive Marketing Content
• Manage Confidential Information in a Secure Manner
• Open to all Licensed Broker Dealers
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
51Copyright © 2016, ShareVault Inc. and S. Jordan Associates
BanqFirst Fully Electronic Investment Bank (continued)
• Firm Overview• Online Electronic Platform Sponsored by TriPoint Global Equities, LLC, a New York Based, Registered
Broker Dealer with SEC and FINRA and Investment Bank• Works with Issuers, Broker Dealers, and Investors Seeking to Raise Capital via Reg A+• Entire Reg A+ Offering Conducted Online and Provides Instantaneous Confirmation and Deposit of
all Investment Transactions• Allows Investors to Deposit and Liquidate Reg A+ Investment Shares Trading on OTC Markets
(~OTCQX) and Nasdaq• Offers Low-Priced Trading Commissions, as Low as $0.99 and $3.95 Per Trade – Make Investing Even
More Accessible to Growing Number of Individual Investors
• Bank Solves Reg A+ Barriers• Processing Large Number of Investor Inquiries, Receiving Investor Funds, and Issuing Securities • Complying with all FINRA Regulations Including those Pertaining to Stock Deposits, Clearing
Certificates, Regulatory Notices (09-05 – OTC Listed Shares)• Broker Dealer Sponsorship – Diligence, SIPC Insurance, Regulations• Verifying Investor Suitability and Investment Objectives• Electronic Trading
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
52Copyright © 2016, ShareVault Inc. and S. Jordan Associates
S. Jordan AssociatesAnnual Events Consulting
Private Placements
& Reg A
FinTECH (Financial
Technology)
• Business Development
• Strategic Advisory
• SJA Worked with Milken Institute Drafting Reg A+ Guidance
• HealtihosXchange: Online Investment Marketplace (Crowdfunding, Co-Investments)
• Capbridge: Online Investment Marketplace (Pre-IPO Financing)
• Singapore Exchange (SGX) – Onboard Companies Into Public Markets
• Reg A+ Partner - BANQ
• Campaign Page/Marketing
• Transfer Agent
• Brokerage
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
53Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Please enter your Questions into the question box in the GoToWebinar Interface
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
54Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Thank You for Joining Us!
S. Jordan [email protected]
+1-847-849-1736
ShareVaultwww.sharevault.com
[email protected]+1-408-717-4955
We will notify you when the recording and slide
deck are available.
$Lorem ipsum dolor sit
Lorem ipsum
Lorem ipsum dolor sit
45%100%
30%
45%
New FinTech Funding
Alternatives for Life Science
Companies
55Copyright © 2016, ShareVault Inc. and S. Jordan Associates
Addendum
16 ®
Reg A+ Overview
Eligible companies organized in and with their principal place of business in the U.S. or Canada
Exemption not available to the following companies :
‐ Reporting company under Exchange Act of 1934
‐ Development stage companies with no business plan or plan to merge into another company
‐ Investment companies
‐ Company issuing fractional interests in oil, gas or other mineral rights
‐ Companies that are disqualified as Bad Actors under Rule 262
Reg A+ Eligible Companies Tier II Eligibility
Tier II securities are exempt from Exchange Act registration under Section 12(g) if issuer meets all of following conditions:
‐ Engages services of a transfer agent registered with the SEC
‐ Remains subject to Tier II reporting obligations
‐ Is current in its annual and semi-annual reporting at fiscal year-end
‐ Has public float of less than $75.0MM as of the last business day of its most recently completed semi-annual period, or, in the absence of a public float, had annual revenues of less than $50.0MM as of its most recently completed fiscal year
An issuer that exceeds Section 12(g) thresholds would have a two-year transition period before it must register its class of securities
Offering statement is filed on Form 1-A with the SEC
‐ Similar to, but less detailed than S-1 registration statement
‐ Audited financials for last two full fiscal years required
‐ May be filed confidentially, providing the SEC an opportunity to review the offering statement and provide feedback without the general public being aware
Pre-filing “testing the waters” allowed
‐ Rule 254(a) allows written materials to be delivered to possible investors to gauge interest prior to filing of Form 1-A
Solicitation allowed
Road shows allowed
Non accredited investors allowed
Offering Process: Key Factors Reg A+ vs. Reg D vs. Reverse Merger
Pros:
Free trading securities – restrictions in fund governing documents limiting or prohibiting investment in restricted securities don’t apply
Public secondary market can develop
Non accredited (retail) investors allowed
Testing waters may be more permissive than general solicitation now allowed under Rule 506(c)
SEC review of offering materials (vs. reverse merger which is disfavored)
Cons:
More expensive than Reg D, although less than full reporting after Form 10, reverse merger or IPO
Ongoing reporting, although scaled SEC review of offering materials
17 ®
Investor Base
Ongoing SEC Reporting Requirements
Restriction on Securities
Ability to “Test the Waters” Before Going To Market
Ability to File Confidentially
Blue Sky Requirements
Limit On Securities Offered By Selling (pre-existing) Shareholders
Dollar Limit for Offering
Tier I & Tier II Comparison
Tier I Offering Tier II Offering
(1) Ongoing SEC reporting for a company that completes a Tier II offering includes (i) annual report on new form 1-K (similar to 10-K), (ii) semi-annual report on new form 1-SA (similar to 10-Q) and (iii) current reports on new form 1-U (similar to 8-K). No quarterly reports are required.
(2) The limitation on the amount of securities non-accredited investors can purchase in a Tier II offering is no more than 10% of the greater of the investor’s annual income or net worth (not including primary residence.
$20.0MM in 12-month period
< $6.0MM OR < 30% of total offering
Yes
Yes
Yes
None (securities are “free-trading”)
None
Accredited & Non-Accredited Investors
$50.0MM in 12-month period
< $15.0MM OR < 30% of total offering
No
Yes
Yes
None (securities are “free-trading”)
Audited Financial Statements(1)
(substantially less than full reporting)
Accredited & Non-Accredited Investors(2)
18 ®
Maximum Total Raised
Number of Investors
Investment per Investor
Investor Disclosure
Intermediary Required
Subject to ongoing SEC reporting following raise
JOBS Act
Unlimited
Unlimited accredited investors; up to 35 non-
accredited investors unless soliciting (if soliciting; 0 non-
accredited investors)
Unrestricted
Not required if all accredited investors; Form D filing
proposed
No
No
$50MM per 12 month period; including up to $15.0MM for
selling shareholders
Unrestricted
Restricted by income / net worth for non-accredited
investors
Required; must be filed with SEC
No
Yes; annual audited financials and annual, semi-annual,
current reporting required
$20MM per 12 month period; including up to $6.0MM for
selling shareholders
Unrestricted
Unrestricted
Required; must be filed with SEC
No
No; as long as exit report filed not later than 30 calendar days
after termination or completion
$1MM per 12 month period
Unlimited but subject to maximum total raised
Restricted by income / net worth
Required; must be filed with SEC
Yes; broker/dealer or funding portal
Yes; at least annually, possibly more frequently
Regulation D Rule 506 (4(a)(2))
Regulation A+ (Tier 2)
Regulation A+ (Tier 1)
Public Crowdfunding
19 ®
Disclosure Liability
Shares Restricted
State Filing
Advertising & General Solicitation
Can public cos., foreign issuers, investment cos. & exempt inv. cos. issue
JOBS Act
Only anti-fraud liability Yes; full disclosure liability
with a knowledge exception Yes; full disclosure liability
with a knowledge exception Yes; full disclosure liability
with a knowledge exception
Yes; for public companies most can sell under Rule 144 after
six months No No Yes; for one year
Usually no if only offering to accredited investors
Exempt from state securities law registration and
qualification requirements
Not exempt from state securities law registration and
qualification requirements
Possibly; depends on future rules by state
Allowed if sales are made only to accredited investors and
issuer takes reasonable steps to verify accreditation status
“Testing the waters” permitted before & after filing; general solicitation permitted before qualification if preliminary
offering circular is provided, general solicitation permitted
after qualification
“Testing the waters” permitted before & after filing; general solicitation permitted before qualification if preliminary
offering circular is provided, general solicitation permitted
after qualification
Not allowed
Yes Only US, Canadian, non-public
issuers may issue Only US, Canadian, non-public
issuers may issue No
Regulation D Rule 506 (4(a)(2))
Regulation A+ (Tier 2)
Regulation A+ (Tier 1)
Public Crowdfunding